Friday, October 28, 2016
Amplify LA's Paul Bricault On Startup Accelerator Lessons, Five Years Later
Venice-based Amplify LA (www.amplify.la) is celebrating its fifth anniversary as a startup accelerator here in the Los Angeles area – one of the few in the area to have survived in more or less original form after the launch of a number of startup incubators and accelerators five years ago. Paul Bricault, co-founder of the accelerator, sat down with us earlier this week to reflect on the lessons he's learned over those five years, and what he's learned about LA's startup environment.
Congrats on your five year anniversary! What's the biggest lessons learned over the last five years?
Paul Bricault: The biggest lesson, I guess, is that when we started, the vast bulk of of our applicants were the three pillars of technology people felt matched the area. The preponderance of applications we received in LA came from those areas. I think that the thought was, if we want to apply to an accelerator in LA, we should have a company has that as relevant focus there. Also, because of the internal dynamics of the talent pool, it effectively lead to more companies in the preponderant areas, which at the time were e-commerce, ad-tech, and disruptive media or media-related companies—such as game companies, companies that were in music, or companies related to the distribution of content. Those were companies like Maker Studios, disrupting the traditional production of content. Those were the three categories, for a long time, that tended to be the domain of the LA ecosystems, just in terms of the number of startups house here, the funding, where you could attract talent, and really sort of where LA gained a reputation. Those areas were reflective of the LA startup economy. It's the same way that both investors and entrepreneurs used to think about New York with financial technology or advertising, because of the relationship to Madison Avenue and Wall Street.
So, for a long time, I think people associated LA's startups with those three areas. The lesson learned, based on the applicants coming through our doors and the companies we saw funded outside of Amplify, was that actually wasn't the case, because of entrepreneurs here from the postgraduate standpoint, external entrepreneurs moving to LA, and even LA-based and grown entrepreneurs who weren't focused on those sectors, and not part of that ecocystem. We saw that companies have become broadly diversified, and are not type focused, and it's not a monoculture or triculture. We have companies here from enterprise SaaS to Internet of Things, to the on-demand economy, to virtual and augmented reality, and health care. Those are historically areas that were not known to be associated with Los Angeles, but they were able to garner more attention and funding, and become a bigger part of Amplify than we thought.
What do you think the biggest thing you've achieved in the last five years?
Paul Bricault: The biggest thing we've accomplished is basically our staying power. There have been a lot of accelerators who have come and gone, or changed their focus point, or changed focus entirely. I say, one of the things I'm most product of, is that we're still at it, we've not changed our focus, and we're seeing the same number of companies funded on a fairly predictable cadence. We're on our third fund, and are now investing out of that fund. We have had a relatively consistent pattern of successfully raising follow on funding for our companies. We have a very high percentage of companies who have raised seed funding, and that percentage has only increased over time. So, the biggest success has been the staying power of Amplify, and more importantly the graduates of Amplify. We have 90 percent of the companies who have come through Amplify who are still out there, raising their Series A, Series B, and now raising growth rounds. Those companies are becoming part of the anchor tenants of the LA startup ecosystem, and they're only four and a half or five years old.
What's the biggest change in the way you operate the accelerator compared to when you started 5 years ago?
Paul Bricault: I think the probably by far the biggest change is two fold. When we started, our first fund made investments of $50 to $75K per company, and we were targeting a term of about three to four months for those companies in the accelerator. That makeup increased over fund two and fund three, and has now changed into investments of $100 to $250K. We basically trebled in size. Secondly, in a bit of a surprise, we changed the term in the accelerator from that three to four months, and really made it more organic and malleable, depending on the company, the sector, and their respective needs. Now, the term is anywhere from three to 12 months. Those changes were made in large part, because we saw the need of companies, and seeing that when they came into Amplify, that $50,000 to $75,000 was not enough to get them to the next funding threshold. We also saw that companies had a higher change of asphyxiating and not having enough cash to get to product-market-fit, or to a certain level of scale, which was required to raise a seed round. We also saw that some companies needed more gestation time in order to get to a position where they could raise capital, particularly companies in sectors that historically needed more time for product development, more time for traction, more time to establish a market. That was particularly true of enterprise software-as-a-service and marketplaces. They really can't accomplish much in an only three or four month time frame. So, we adjusted that to be consistent with what a prospective company would need in the area, because we saw that companies in other accelerators had a higher chance of those types of companies going under, if they were in sectors that required longer gestation times but where they weren't given the opportunity.
What is the number one piece of advice you'd give an entrepreneur about being accepted into Amplify?
Paul Bricault: One area we're very focused on, is not just the dynamic between the teams, but the skill sets that are represented by that team. It's very hard for us to back an entrepreneur where the team is one-dimensional, such as a team that either comes with an all business and sales, or all technology and engineering background, or all from a product background. We have a hard time backing unique dimensionality with teams. We want to see a holistic team, which covers technology, product, business, and sales, if at possible. Obviously, we also want to see a strong, interpersonal dynamic between those teams. That's the most important thing. We also are targeting markets or sectors where, no only is the team passionate about solving a specific problem, but there is a key time of need in that specific market. It needs to be a problem that has to be solved in the current environment, something with is either very pressing, or obviously needs to be solved, but has not been solved.
Thanks, and congrats again on hitting five years!